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The Profit Sharing Agreement For Investors is a crucial document used in German business transactions when companies seek to establish structured profit participation arrangements with investors without necessarily offering direct equity ownership. This agreement is particularly relevant in scenarios where businesses want to reward investors with a share of profits while maintaining existing corporate structures. It must comply with German corporate law, including the German Civil Code (BGB) and Commercial Code (HGB), and typically includes comprehensive provisions for profit calculation, distribution mechanisms, investor rights, reporting obligations, and exit provisions. The document is especially important for growing companies seeking alternative financing methods and for investors looking for profit participation without full shareholding responsibilities. It addresses key aspects such as calculation methodologies, payment terms, information rights, and regulatory compliance, while providing flexibility in structuring the profit-sharing mechanism according to specific business needs and investor requirements.

1. Parties: Identification of the contracting parties - the company and the investor(s)

2. Background: Context of the agreement, including company description and investment purpose

3. Definitions: Definitions of key terms used throughout the agreement, including 'Profits', 'Investment Amount', 'Distribution Period'

4. Investment Terms: Details of the investment amount, payment terms, and any conditions precedent

5. Profit Sharing Mechanism: Detailed explanation of how profits are calculated and distributed, including calculation formula and frequency

6. Payment Terms: Timing and method of profit distributions, including any minimum thresholds

7. Information Rights: Investor's rights to financial information and company records

8. Representations and Warranties: Standard representations from both parties regarding capacity, authority, and compliance

9. Obligations of the Company: Company's ongoing obligations regarding business operation and profit calculation

10. Investor Obligations: Investor's obligations including confidentiality and regulatory compliance

11. Term and Termination: Duration of the agreement and circumstances for early termination

12. Exit Provisions: Mechanisms for investor exit, including transfer rights and company purchase options

13. Governing Law and Jurisdiction: Specification of German law application and jurisdiction

14. Miscellaneous: Standard boilerplate provisions including notices, amendments, and severability